Data showed that China’s economy grew 6.7% in the first quarter from a year earlier, according to the National Bureau of Statistics. The figure was in line with what analysts expected, although China’s economy still slowed from the 6.8% economic growth seen in the previous quarter.

Other key gauges of China’s economy picked up. In March, Chinese industrial production rose 6.8% from the previous year, beating analysts’ estimates. That month, retail sales also jumped 10.5% from last year. Meanwhile, new home starts surged 19.2% in the first three months of the year, compared with the same period last year.

The batch of data failed to instill investor confidence. Some analysts said investors were selling to bank profits, since the Shanghai market has rallied roughly 16% since the end of January to Thursday’s close. But Shanghai’s key benchmark is still down about 13% for the year because of huge losses in early January.

Selling pressure in Chinese stocks spilled over to Hong Kong’s market, which is often used as a proxy for global investors looking for exposure to Chinese companies. The benchmark Hang Seng Index
HSI, +0.32%
was down 0.1%, and the Hang Seng China Enterprises Index
160462, +0.43%
a gauge of Chinese firms trading in the city, was down 0.3%.

“It would take a lot more significant improvement in Chinese economic data for global investors to be more calm and ease their worries from the bad start of the year,” said Alex Wijaya, senior sales trader of institutional sales for CMC Markets, based in Singapore.

New credit data showed a different picture of China’s economy. Chinese companies took out 1.4 trillion yuan worth of loans in March, higher than the 1.1 trillion yuan that analysts were expecting. That indicates businesses borrowed more, at a time when the International Monetary Fund has highlighted the problem of how many large Chinese companies don’t make enough profit to cover their interest expenses, which could weigh on global financial stability.

In Japan, the retreat broke a string of positive days, though the losses didn’t offset the gains made earlier in the week. The Nikkei Stock Average booked a 6.5% gain this week, the first positive week since the week ending March 25.

“I think Japanese equities should still remain under pressure,” said Gan Ai-Mee, a money manager for Aberdeen Asset Management’s Japan equities strategy. “So I think that, as well as the stronger yen, could actually be bad news for Japanese exporters.”

Gan expects to be able to weather market volatility even if the Japanese yen continues to strengthen. She invested in companies projected to post earnings growth despite losses from foreign exchange conversions, she said. That includes some consumer goods firms, and companies focusing on factory automation technology, she added.

An earthquake late Thursday in Japan’s southern island of Kyushu weighed on shares of chip supplier Renesas Electronic Corp. and its key customer, Toyota Motor Corp., down 2.7% and 1.1%, respectively. Renesas has a factory about 8 miles from the quake’s epicenter but said it found no major physical damage to the plant.

Investors were also being cautious before Sunday’s meeting among the world’s largest oil producers in Doha, Qatar for a potential deal to freeze oil output, which could give a boost to crude’s recent price rally.

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